‘Parochial': Turnbull slams ‘NBN cheerleader’ media

news Shadow Communications Minister Malcolm Turnbull has again heavily criticised Australia’s technology media for what he described as its “cheerleader” approach to the Government’s National Broadband Network, saying the nation was “let down by the so-called technology media” as it did not examine local events closely enough with reference to the global telecommunications sector.

The Member for Wentworth yesterday morning gave a speech to the Innovation Bay organisation in Sydney, a not-for-profit networking group which connects entrepreneurs with investors and mentors, as well as other stakeholders in the early stage technology sector in Australia. In general Turnbull’s comments (the full speech is available online here) focused on the dynamics of starting businesses in Australia – ranging from the investment environment to the tax situation for startups. Turnbull himself has been an investor in early stage startups and made much of his fortune through the success of early Australian ISP Ozemail.

However, at the conclusion of the speech Turnbull also went into what he described as a the “unbelievably uninformed” commentary in Australia’s technology media regarding Labor’s flagship National Broadband Network project, which Turnbull and others within the Coalition is being delivered too slowly and at too great an expense.

Turnbull said the Coalition was “absolutely committed to delivering the NBN sooner, cheaper and more affordably than the way Labor is going about it”. He added that the Coalition would not have set up a government-owned company – NBN Co – to meet this aim, but “it’s there and the job has to be completed”. “Leaving aside all the issues about competition and government ownership – happy to discuss them if you wish – the fundamental problem that the NBN has at the moment is that the network is being built far too slowly and at far too great an expense. And that’s an issue both for the people that are paying for it, that’s you in your capacity as taxpayers, and the people that will ultimately use it, that’s you in your position as consumers or business-people who are purchasers of the connectivity,” Turnbull said.

However, the Liberal MP stated, Australia was not being well-served by the technology media in discussing the dynamics of the NBN. “Is there anyone from the technology media here, by the way, anyone? No?” he asked the audience. “We are so let down. Again, I’m going to complain about the media.”

“We are so let down by the so-called technology media, here in Australia. The commentary about the NBN and the issues associated with it is just so unbelievably uninformed. I find it extraordinary—when did you last read a piece anywhere that goes into some depth about what’s being done in other countries – in comparable countries, whether it’s the United States or Britain or continental Europe or East Asia? You don’t see that and there is a sort of cheerleader approach to the NBN which is actively, actively misleading people. The truth is there is no country in the world that is spending the sort of money – anything remotely approaching the sort of money our Government is spending on broadband. There is no country in the world that is building a new Government monopoly customer access network.”

The Shadow Communications Minister added that the commentary on the issue in Australia was “just terribly, terribly ill-informed”.

“So I’m happy to talk about that if you’re interested. But it’s one of the things that we struggle about, where you ask yourself, ‘Why is it that the most parochial part of our media is in fact our technology media?’ It’s an incredible paradox because everywhere else – you know in the business pages, you are reading about what is going on in the international economy. You pick up the financial pages and you can get a very, very comprehensive run down of what’s happening in Europe and what is happening with the fiscal cliff in the United States. But with technology it’s just so inward-looking,” he said.

However, not everyone agrees that Australia’s technology media has been broadly positive about the NBN. A recent analysis conducted by journalism professors at the University of Canberra, for example, found that the majority of articles about the NBN published by the nation’s premier business newspaper, the Financial Review, in a given six week period, were negative or neutral towards the project, with only a small amount being positive towards it.

There have been some factual errors published by Australian media regarding the NBN, but those errors have tended to be in articles criticising the project, rather than those supporting it.

In late June, for example, the newspaper published an article stating that there was “a real risk” that the NBN’s fibre infrastructure might be overtaken by technical breakthroughs in areas such as “wireless technology”. “One such breakthrough on the technological horizon is Data In Data Out wireless technology, which promises wireless speeds up to 1000 times faster than those offered today,” the newspaper claimed. However, the notion that wireless could serve as a replacement for fibre or other fixed network technologies is heavily disputed by the global technology community and is a view outside current mainstream thinking on the issue.

The AFR also reported that take-up of the NBN in the areas where it is available so far has been “minuscule”. Unfortunately, this claim is also heavily disputed. In general, Australia-wide, NBN take-up rates have been strong. In fact, in communities such as Willunga in South Australia and Kiama in New South Wales, the take-up rate in the short time the NBN has been active in those areas has been north of 30 percent. This rate is expected to accelerate as Telstra’s competing copper cable is shut down in areas where the NBN has been rolled out, forcing Australians to migrate onto the NBN fibre.

The publication of that article came a day after the AFR published another article on the NBN stating that two key NBN contractors weren’t bidding for the next round of NBN construction deals due to rollout delays in the network. However, after the publication of the article, NBN Co and the contractors publicly denied the AFR’s allegations as “patently untrue”.

Over the past several years, there have been a number of misleading articles published by various other local newspapers about the NBN. In December, the Australian Press Council expressed concern about the Daily Telegraph’s coverage of the Federal Government’s National Broadband Network project, backing a local critic’s complaint that three articles in a short period of time had contained “inaccurate or misleading assertions” about the NBN. Similarly, in March this year, another News Ltd publication, The Australian, published a correction to a story after it inaccurately alleged that a school in South Australia would have to pay $200,000 to connect to the NBN; in fact, the school will receive NBN access as part of the normal rollout.

opinion/analysis
In my personal opinion, Australia’s media has been heavily critical of the NBN project in general since its inception (you only need to read The Australian or The Financial Review to have this impression reinforced), although I do agree with Turnbull that the niche of Australia’s technology media has been broadly positive about the project.

Also in my personal opinion, there is a reason for this. Mainstream journalists in Australia, by and large, do not understand the detailed technical and industry dynamics underpinning the NBN project, which have been threshed out in constant debate over most of the past decade. Simply put, those mainstream journalists have generally not been a meaningful part of that debate. When they look at the NBN, they see a slow-moving monopolistic government project which requires large amounts of capital

In contrast, technology journalists such as myself, who have been covering the NBN issues day in and day out for most of that past decade, do understand the debate. And along the way, as the national NBN debate has gradually worked through and resolved most of the issues around the project (and government policy and NBN Co’s approach has changed to reflect that understanding), most of Australia’s technology niche media has come to view the project broadly in a positive light. The reason for this is that the NBN is objectively a positive project. It is being delivered by competent people, it has the right aims, the population overwhelmingly supports it, and it’s using the right technologies to plan for Australia’s long-term future.

Despite this, I don’t agree with Turnbull that Australia’s niche technology journalists have given up their objectivity and become ‘cheerleaders’ for the NBN. I personally have written many articles noting positive aspects of the Coalition’s rival policy (see here, here and here, for example), and we have also written a number of articles examining the international situation (see here, here and here, for example).

Turnbull appears right now to be feeling as though the Coalitions’ NBN message isn’t getting through. But I think in this case his criticism has the wrong target. Australia’s NBN debate right now is slanted towards the NBN, but not because the media is biased towards it. It’s slanted towards the NBN because it’s a fundamentally better policy than the Coalition has put up so far. As I wrote yesterday, the Coalition’s NBN policy is a good policy. But Labor’s NBN policy is demonstrably better. I will take this opportunity to remind the Member for Wentworth that he has still not responded to a series of fundamental questions about the Coalition’s rival policy which Delimiter put to him some three months ago. Maybe when he does, we can have a real debate and stop these complaints about a media which is more than willing to listen to anything Turnbull – with his sky-high public profile and electorate popularity – has to say.

PS: For the record, Mr Turnbull, I have had the pleasure of attending an Innovation Bay dinner in the past. I’ll see what I can do to get to future events. It’s not always possible — I do have my own small business to run as well — but the Innovation Bay guys are a great bunch and critical to Australia’s IT sector. It’s good to see the Coalition supporting them and Australia’s IT startup sector in general. Delimiter will try to do the same.

Just thinking this through for a minute, The Turnbull is complaining about the media commenting positively on a fleshed out project, versus not gushing about a list of promises that have no detail to back them up…

I note The Turnbull made sure there were no media with a technology background before launching his lame tired old tirade. Wouldn’t want to have to answer some pesky questions about his non policy which he has avoided like the plague. The gutless wonder needs to man up and put his policy where his mouth is to see how it stacks up. Shooting the messenger only highlights the vacuum that is the coalition broadband policy.

> when did you last read a piece anywhere that goes into some depth about what’s being done in other countries – in comparable countries, whether it’s the United States or Britain or continental Europe or East Asia?

East Asia? Japan and South Korea are basically FTTH for what it’s worth. Continental Europe? FTTH grew 16% in the first half of this year. Britain? Starting to roll out FTTH on top of FTTN. United States? Google Fiber just launched and AT&T have been overstating their FTTN coverage numbers.

It has a lot of examples and even more data. It’s brilliant and non-biassed.

The mainstream media, Fairfax and News Limited, has an incredible anti-NBN bias. This whole thing from the technology media for FTTH cheerleading is not a reaction against that. It’s about facts. And the fact is that the Turnbull plan is good, there is no coalition plan, and that the Labor plan is best.

If we’re going to keep on having this discussion that three things need to be done:

1) It’s about time to point out where the technology media is supposed to be wrong. If one of us is wrong, call us out on it. But that means that you’ll also need to call out the mainstream media when they get facts about the NBN wrong. It serves Australians not one tiniest bit if you go on 2GB and let the narrative be ‘wireless will be fine most of the time’. It’s genuinely counter-productive. When Pyne says no one is on 100 Mbps, you need to be out there and spreading the truth. But right now, you’re being tainted by association. This is supposed to be a truthful discussion, and plugging one’s ears and not calling out people when they’re not engaging in such a discussion is hurting Australians.

2) Just because FTTN has a quarter or half or a third of the capital expenditure doesn’t mean that it’s the best solution. Just because FTTN is faster to deploy doesn’t mean that all the regulatory stuff and renegotiating with Telstra, who are quite likely going to sue (whatever you may think in regards to how happy they’ll be that they’ll get money indefinitely for their copper), are going to leave this whole plan on a timeframe shorter than what NBN Co is doing. You’re ignoring the many many questions out there because you don’t have an answer. NBN Co’s plan has an answer to basically all the questions out there. It has some very good answers about Telstra. In fact, NBN Co is a solution for a world-wide unique problem. Basically no other country had privatised a telco that had both an HFC network and all the phone exchanges. No other country allowed for such a telco to be both wholesale and retail with for all it’s worth almost exclusive access to the ducts. The coalition created a problem that had no equal in the world, Telstra, and NBN Co is a viable solution for this.

3) NBN Co deserves to be criticised. But the current level of criticisms emanating from the coalition are pointless, they’re often lies and they have no basis in reality. So what if NBN Co has only had 6,500 premises on fibre some months ago? This is a long term project and if this is going to be the only standard we’re gauging things on now, then surely we should have shut down the construction of the Sydney Harbour Bridge halfway through its construction.

Brilliant post. Turnbull needs to respond to these sorts of questions instead of hiding in a bubble of his own ego blaming the rest of the world for not appreciating his plan when he won’t discuss the detail at all let alone release it.

agreed.
if he wants the tech journalists to get behind his vision, then it needs to stop being just one man’s opinion and become official coalition policy with the backing of his party.

how can he complain that tech journalists are pro-NBN when all they have to barrack for is the NBN?
let them see the official coalition alternative. if it stacks up to what we have now, then they will stand behind it.

Also, one last thing. There’s the ingrained impression that an economic liberal has that the NBN is socialist communism. Truth is that I really think that government-run businesses aren’t the way to go. I think that all highways (if there is another road at least) should be toll-roads. Hell, who knows, maybe we should go all liberal on all roads and streets. I think that the AWB should be abolished. But for a few things we have to acknowledge that a government should provide at least an infrastructure that serves as a baseline, one that serves something on top of which competition can play out.

Powerlines, water and sewerage, healthcare, public education, streets, arts funding, public broadcasting and fixed communications. Those are absolute needs and they should be provided as cheaply and as abundantly as sensible. Everything else every tech journalist will be happy to argue should be provided by the market. Truth is that every tech journalist will even acknowledge that FTTH isn’t for everyone. It isn’t. 40% of people will always be on a speed, even on FTTH, for which FTTH isn’t a prerequisite. It’s just that once you run fibre past 30% of the population, which will have to happen eventually anyway, it becomes more effective to connect others to fibre to you can shut off a copper network that costs $1 billion a year, and two HFC networks that are less and less able to cope.

Leave everything else out and think about the really awesome competitive players, Internode and iiNet and TPG and even Dodo or Vodafone. They’re the ones who deserve to prosper in this market, against Optus and Telstra. The question is a simple one. What can we do to make sure that Internode can win over Telstra – because the current situation while Telstra wholesales ADSLs expensively in rural areas is not going to be fixed, nor is the problem with Telstra being able to bundle FOXTEL.

Neither the coalition nor the Turnbull plan are able to answer those two fundamental statements – what about Telstra owning all the copper, nor what about Telstra running FOXTEL? And without those two statements, and without acknowledgment that FTTH is the ultimate future for at least about 30% of premises in the next 20 years, then Internode is at a disadvantage. Then TPG is at a disadvantage. An NBN Co that exists, runs FTTH provides an viable answer for iiNet and Optus and Exetel and Westnet. It provides a viable answer for Telstra even.

Answer those questions and maybe some techie journalist zealots might listen. Don’t have criticisms for NBN Co that are either deliberate misinterpretations of what it even is or are just plain pointless, but have instead viable solutions as to what should be done about Telstra, what should be done about our having very very much crappier broadband than the Ukraine or Romania, answer questions that don’t involve having a facade of a plan that includes building a network that – given the Belgian experience – might about double our average upload speed, because that’s just pointless.

Being able to say that a plan is cheaper and done sooner, when it’s really just a lower capex but higher capex and less than a years’ difference in the likely point of peak rollout, is pointless against these real questions, questions that are going to be of concern for decades to come unless we answer them now.

Over a guaranteed lifespan of 60 years for fibre, probably even decades more, what does it matter if the capex is $20 billion or $30 billion or $40 billion, especially when countries are getting returns on that investment in typically under a decade? Who, with Australia at near enough 10% or less of net debt as percentage of GDP cares if this investment will take even twenty years instead of ten years to return money?

If nothing else, at least some contribution to the discussion could be made by the coalition releasing the results of that broadband survey. Malcolm Turnbull and people like Luke Hartsuyker on the coalition side I’ve seen make, at times, good quality criticisms of NBN Co that are based in facts. That’s the discussion we should be having – whether NBN Co is reusing satellite dishes that already exist (they’re not), whether providers are able to provide UNI-V ports, what should be done about councils that don’t want towers. Those are things we should be talking about. Not things like Warren Truss saying ‘no one is using the NBN in my electorate’ or Alan Jones saying ‘wireless is the future’ or Christopher Pyne saying ‘no one has connected at 100 Mbps’ or Malcolm Turnbull saying ‘the NBN will be enjoyed by our grandkids except, for most of them, in their very old age’.

I am a strong supporter of free markets but the NBN does not fall into the category. By monopolising the market so that if you want telepony or internet services you have to subscribe there is no scope for competition (I am only looking at the wholesale level, the prices will still translate directly across to consumers).

Given that consumers are forced to use the NBN what is to stop the NBN Co’ from recouping excessive costs through its monopoly staus (e.g. its CVC charge as bandwidth demand increases)? Given the strongly regulated market to ensure the NBN Co is free of competition why shouldn’t it be completely regulated?

Given the strongly regulated market to ensure the NBN Co is free of competition why shouldn’t it be completely regulated?

Ummm, it is….Check out the numerous discussions and papers from the ACCC about NBNCo’s SAU and WBA. It will be THE most highly regulated Telco in Australia, possibly the Western world.

The NBN is regulated to the back teeth to provide the lowest price wholesale access to all RSPs. That is fact and will not change. The ACCC only allows increases in price beyond the CPI, after consultation and approval by themselves and discussion with the industry. NBNCo. cannot simply wander up to the ACCC and say ‘we want to increase prices cause we underestimated costs’. The ACCC has to see all financials and do consultations.

Yes. Let’s roll out, hmmm, say 3 networks and have competition. The prices won’t quite rise by the factor of 3 required to pay for the 3 competing networks because of competition. Nothing like ideology over common sense.

Great strawman. Nice idealological opposition. Why Don’t you live up to you name and inject some accuracy into your comments.

The gist of my comments was to imply that there are other pricing structures that are available when a market based mechancism is not applicable as it is monopolistic structure.
To properly police such a proposal not only do its prices have to be checked, but also all expenses, as NBN will be chasing its mandated IRR of 7% so expenses and capex will be looked at by the ACCC which is no small task. That is where the controversy lies. That is why I am not confident in the whole process as there are too many finer details where things can be hidden or glossed over.

@ SevenTech

Lowering prices further and using a government subsidy is another option. This will increase uptake of NBN services and the social benefit from the project (assuming positive externalities and a normal demand curve). The government has cited the NBN in the Asia white paper, benefits for small businesses so it does make sense with so many broad benefits for there to be a general charge to the taxpayer to maximise benefits to society.

In addition the CVC charge is still somewhat controversial i thought as it has the scope to increase costs as data usage increases even at current rates. I thought in addition (correct me if i’m wrong) that revenue per customer was going to grow over time in the NBN Co business plan?

CVC is a bandwidth related charge. And the revenue per user will grow as users opt in to higher speed plans.
Revenue isn’t projected to grow as a direct result of increasing prices.

It is a critical point that I see a few people getting wrong. NBN projects increased revenue from a change of products that it sells, not from increased prices.

It also has a government mandated rate of return. They basically aren’t allowed to earn too much money, thus they have no incentive to raise prices to capitalise on their monopoly position as you appear to fear. Just one advantage of being a GBE. (The other being a cheap loan!)

Michael.
Why is it that the free market apologists always demand Government handouts to provide the service they promise the private sector/Free Market and competition will provide cheaper, better and quicker.

All the anti NBN media is constantly bleating about providing a over the long term bottomless pit of taxpayer subsidy/handout rather than the NBN GBE model that will actually repay all taxpayer monies with a profit.. Just pigs swilling at the trough trying to delude us they have silk ears

Do not regulate the market into oblivion, subsidise a company with cheap government finance then state that it can run like a private firm. It will not. Once the government intervenes this strongly into a market, it should not try to follow free market principles as that is pure stupidity.

Btw – considering that the consumers by and large will also be taxpayers how much difference is there? Which taxpayers will not require telephony or internet services?

The SAU requires prudent designs, and prudent costs to ensure that there won’t be excess costs. Such controlls as compeditive tendering and ACCC aproval for changes to the network design is why there won’t be any excess costs that have to be excluded under ACCC regulatory review.
This is noted in section 6.8 of the SAU supporting submission.http://www.nbnco.com.au/assets/documents/sau-supporting-submission.pdf
Infact, you probably should consider reading the entirity of section 6 of this submission to make sure you can factually comment on the NBN pricing regulations.

I think a 343 page SAU, along with a 240 page supporting submission, qualifies as being completely regulated. I’m pretty sure that the NBN has been appropriately hobbled by the sheer weight of the regulations.
If you doubt that the NBN is being regulated as a monopoly, you could comment on the SAU to highlight your concens, which is open for comment until 11 Jan 2013 with the ACCC. Otherwise don’t slander the professionality of the ACCC just because you’re not confident that any public servant will do the job that they were hired to do. You seem to be using a straw man yourself there.

You also don’t seem to realise that there is a revenue cap, called the ABBRR in the SAU, based on the 6-7% regulated rate of return. If more customers use the NBN, or if the CVC gross revenue soars on higher download amounts, NBN will be legaly required under the SAU to reduce their prices to keep their revenue under the cap. That means that ISP’s will face gradually reducing wholesale costs and will be able to include more CVC (meaning quota) at the same pricing point, same as has happened in the past.

I hope these easilty researchable facts will enlighten you about these matters and hopefully we won’t have to comment on them in the future.

Ahh Thank you Lachlan. That alleviates my concerns for the CVC costs but I would still prefer a dirrect subsidy for rural users instead of a cross subsidy.

If there is a net benefit to society by subsidising them, then it should be open through the budget process rather than opaque through a cross subsidy in higher overall prices. as i have stated before it also reduces prices for all consumers and societies overall welfare from the NBN.

To solve that problem all you need to do is couple a direct subsidy to a reliable revenue stream.

In either case there is an ongoing subsidy, either direct from the taxpayer or indirect from on consumer to another. Atleast with a direct sibsidy it is possible to see how big it is and how it is changing over time while an indirect one will remain hidden inside the pricing structure.

“This is about how the wholesale market is priced. This is still important as the retail pricing market will be wholesale prices with a retail margin added on to allow for costs and profit. To achieve the maximum benefit for society we need to have the lowest prices (margins) in both markets (retail and wholesale).”

Michael I might have missed something but my understanding is that NBN Co have to reduce their wholesale prices once their profits reach a certain point. Doesn’t this mean that the NBN Co’s wholesale price is effectively controlled?

If I am right then I don’t think there is much to worry about. It would seem to me that if uptake by retail customers continues with the same pattern as at present then wholesale prices are going to be dropping sooner rather than later and hopefully we will see a similar movement in RSP retail prices.

@Michael: Just wildly swinging a bat here and not taking pot shots at you or anything but from what I recall the last subsidy scheme to try and improve the ‘Net at the bush/regional areas just did not meet the intended targets because the subsidies themselves just could not off set the costs for the telcos to upgrade/manage the low profit areas.

So if we do go the subsidy route how would we be able to overcome that initial problem which led to the first subsidies being woefully inadequate? I mean it’s easy to say just increase the subsidy but we all know that is just a small short term band aid solution at best. And a huge financial sink hole at worst.

I agree that the bush is significantly more expensive to service than urban areas and that is part of the reason why I believe that it should be subsidised through a direct subsidy and not an indirect one. A direct subsidy is more transparent in that the total is known to the public whereas in an indirect subsidy they do not breakdown your bill for you into which components are subsidising other users.

It is possible to subsidise rural users as the business plans have shown but is it the most efficient method for us as a nation? or is it the most efficient method for NBN Co?

I find it strange logic, that those who oppose/appear to oppse the NBN, will claim it as taxpayer wastage, even though the NBN is not a taxpayer impost and will repay itself overtime, by capturing the urban cream (and accepting the rural impost).

But they “will” openly accept and even argue non-wastage, relating to gifting the very companies who have ignored us all and therefore put us into this position, multi $m or $b ‘taxpayer funded subsidies’ with no ROI, for these same companies (who ignored us) to build and own our rural network, whilst also giving them free reign to easy urban profits.

“But they “will” openly accept and even argue non-wastage, relating to gifting the very companies who have ignored us all and therefore put us into this position, multi $m or $b ‘taxpayer funded subsidies’ with no ROI, for these same companies (who ignored us) to build and own our rural network, whilst also giving them free reign to easy urban profits.”

This is completely missing the point. Unless the NBN Co has been operating prior to the construction of the NBN (and there are multiple companies operating in the wholesale NBN market) then I do not know who you are refferring to when talk about “companies (who ignored us)” in refereence to the subsidy.

NBN Co’ as the whosale provider is the company who will incur greater costs servicing rural areas and therefore is the only one that should get any form of assistance from the government.

But NBNAlex, why is the cross subsidy model a better model for a natural monopoly like the NBN with significant positive externalities rather than a direct subsidy?

“It is possible to subsidise rural users as the business plans have shown but is it the most efficient method for us as a nation? or is it the most efficient method for NBN Co?”

Of course it is the most efficient model.

Private enterprise will always provide the minimum service for the maximum subsidy. They are in business and what they care about is profits not customers social needs. Recognise the facts that have been evident for decades. Private enterprise are leeches. If they aren’t they go out of business fast.

The NBN Co has been purposely designed so that all the RSPs pays the same rate to access the internet infrastructure and are able to offer the same service and cost to everyone anywhere in Australia. There is going to be no opportunity for the RSPs to gouge the taxpayer by charging the Government additional amounts by claiming a subsidy to service people who live in Broken Hill or Alice Springs.

The NBN model very effectively eliminates the opportunity for price gouging by RSPs to provide services to rural areas which would not normally be profitable. It reduces the cost of providing the service to the minimum possible. Instead of paying the cost to right the rural disadvantage out of taxes the amount is paid out of internet costs by the users which effectively means instead of the charge being against their tax contributions it is against their NBN internet/phone contributions and because it is more equitable they are probably paying less.

Sure the Government could chose to directly subsidise the provision of NBN access to the remote communities but having a single unified charge is simpler, more effective and fairer for all..

Currently NBN Co’ is forbidden by law to price discriminate based upon location. Why do you continually insist that the debate includes RSPs?

“There is going to be no opportunity for the RSPs to gouge the taxpayer by charging the Government additional amounts by claiming a subsidy to service people who live in Broken Hill or Alice Springs.”

As you said this does not include RSP, so why do you even talk about them at all (are you mixing up different parts of the supply chain?). This is about how the wholesale market is priced. This is still important as the retail pricing market will be wholesale prices with a retail margin added on to allow for costs and profit. To achieve the maximum benefit for society we need to have the lowest prices (margins) in both markets (retail and wholesale).

The reason why people have been ignoring the retail market is that with uniform access they are assuming that competition will be able to drive the price down to the efficient level. That is why all the focus is upon the wholesale market.

“The NBN model very effectively eliminates the opportunity for price gouging by RSPs to provide services to rural areas which would not normally be profitable. It reduces the cost of providing the service to the minimum possible. Instead of paying the cost to right the rural disadvantage out of taxes the amount is paid out of internet costs by the users which effectively means instead of the charge being against their tax contributions it is against their NBN internet/phone contributions and because it is more equitable they are probably paying less.”

Bob, a cross subsidy sets the price at the weighted average of the prices for the different areas. This price will be naturally higher than that of the city areas where the population density is higher. Since wholesale costs will be constant for RSP’s there is no effect on RSP’s for rural or urban customer and this is a good change but that is a different argument as the costs have to be borne entirely by the wholesaler. (they have to go somewhere).

In a direct subsidy the price can be set as low as that of the city users. The lower cost of the internet services will entice more users to purchase more services, increasing the benefits of the NBN to society and net welfare gained from the project. In addition as many of the benefits from the NBN will be felt by companies as well as private individuals they will share the costs of it as well as the benefits. Other benefits of a direct subsidy include addition transperancy as the entire cost of it will be on the budget papers and will be open to scrutiny instread of hidden inside the pricing structure. Political nature and the tendancy to find easy savings will keep pressure on the subsidy to prevent it from growing and stop taxpayers from paying too much. As a direct subsidy averages out the extra cost against more a larger base and entices in more customers it will be a smaller charge per person.

Apart from all your points, some of which may have merit, there is one GIANT reason for cross-subsidy, rather than direct- privatisation.

I don’t want the NBNCo. to be privatised. But it may very well be. And if it is, a cross-subsidy, requiring a maximum wholesale price regardless of cost, rather than a direct subsidy, which DOESN’T provide for a maximum wholesale price, as it is linked DIRECTLY to how much it would cost a private company OVER the city prices to provide the minimum level of service (which can be VERY easily fluffed: see Telstra), is a more efficient regulatory instrument to provide basic service levels.

Seven_Tech, If one method has an inbuilt price maximum I would have thought that both would have. The difference being that to make up for lower prices that government subsidises the company somewhat so that the IRR meets ~7%.

I didnt go into that area too much as I assumed that similar price controls that apply to the current model would apply to one with a direct subsidy as well, with both ACCC and government oversight on the subsidy.

We were talking about the incessant claim of taxpayer wastage Michael, please try to keep up ;)

Direct ‘taxpayer’ gifts to private companies to own and profit from a new but lesser network vs. fully repaid NBN, with no taxpayer impost, which will be an asset for Australia/Australians and is state of the art.

Please put you admitted to, ideology aside, and answer which is better for the taxpayer?

“Direct ‘taxpayer’ gifts to private companies to own and profit from a new but lesser network vs. fully repaid NBN, with no taxpayer impost, which will be an asset for Australia/Australians and is state of the art.”

Again you are completely missing the point. Since you have not read or understood any of my previous posts I will state it one last time.

It is about pricing models for the wholesale network only.
It will not affect the build at all.
It will affect the price and consequently uptake.

Btw,

I have answered which I feel is better for the taxpayer for reasons I have outlined above. Whether you pay as a consumer or as a taxpayer there is only a small difference yet there are differences to the net benefit to society.

“One of us is an unabashed NBN supporter (simply because the overwhelming evidence dictates so) and the other is a self confessed conservative/Liberal voter.

Ergo, one of us has made up his mind due to the evidence and the other has done likewise because his politics says he must.”

I know and If you read my posts you would see that it is you. I am actually only suggesting an alternate model for NBN pricing. If you didnt have such a strong bias against anyone who dares suggest an alternative, you might actually be able to have a debate about improving the NBN or is it just conservatives that you dont like?

Btw since when did being a conservative and an NBN supporter become mutually exclusive? I know preconceived notions and stereotypes are fun but they are not conducive to good debate.

Again, before I get any further off topic which does seem to happen with you a lot, why don’t you address the actual issue under discussion? Or at the very least respont to the points I raised in my posts?

But it does seem that you enjoy attacking people who you feel are LNP supports on that basis alone. Great to see your claim of being unbiased holds true.

Your only ‘change’ discussed by yourself is changing from cross to direct subsidy. But your only argument for such is unproven ‘efficiencies’ in direct subsidies. Why would a cross-subsidy, which is automatically designed to keep max prices down, regardless of cost, be more efficient than than a direct subsidy who’s ‘cost price’ difference could quite easily be inflated?

Cross-subsidies by their nature promote efficiency in cost, as any difference in lower costs, they get to keep and any rising in costs they have to absorb (as they cannot raise prices per beyond the WBA limit of CPI + 1.5% I believe). Direct subsidies DON’T, because it IS the difference between the cost and the price they are refunded. So all they have to so is say it costs more, easy to do, and they get more.

Oh, btw if you didn’t recognize it, this argument was first proposed by Henry Ergas.

The efficiencies, seven_tech come from the transperancy of having the subsidy being on budget.

For the other issues I feel that your are bringing in other issues that are not directly involved with how the subsidy is structured.

I see a cross subsidy as one where one group of consumers subside another through (relatively) higher prices. In this case urban consumers have higher prices so that rural ones can have lower prices.

A direct subsidy is one where the subsidy comes directly from one group to another in this case from the government to rural consumers.

The other differences in the subsidies is based upon the finer details of how the subsidies are structured. A direct subsidy could have the same efficiency drive as your cross subsidy by determining the cost difference initially. Then if you fix the subsidy at that amount if the company becomes more efficient after that any further savings are theirs to keep and the cost will not rise. In both situations the regulatory restrictions imposed to minimise the impact of its monopoly status should remain.

But I’m not sure what you mean by a cross subsidy is designed to keep max prices down?

e.g. simplified model: Price = p; Quantity = q
There are two groups for which there are different marginal costs to service. They are also different sizes.
P1 Q2

(If you really want I can calculate the cost of the subsidies / benefits for this model).

I would have thought that since this is a monopoly provider the maximum price would be restricted by the SAU lodged with the ACCC and not the pricing system. By changing the pricing system it would allow them to charge lower prices and still meet the IRR targets (and increase net benefit to society).

(If you really want I can calculate the cost of the subsidies / benefits for this model).

I would have thought that since this is a monopoly provider the maximum price would be restricted by the SAU lodged with the ACCC and not the pricing system. By changing the pricing system it would allow them to charge lower prices and still meet the IRR targets (and increase net benefit to society).

I’m aware it was Ergas first proposed it. I disagreed with it then and I disagree with it now. The cross-subsidy is designed so that no matter the cost to provide a service to a location, the price for providing the service to that location for RSPs is exactly the same for all locations. This means, there is a sliding scale on which the subsidy works- those areas further out cost more and are subsidised higher. But it ALSO means that those areas where it is cheapest usually pay proportionately more than those areas where it may be slightly more expensive and they more than areas slightly more expensive than that, etc. It promotes providing a base level of service at the cheapest cost possible to ensure they get the most profit, as it relies on the croas-subsidy not sucking as much funding away from the more profitable areas to provide for the less profitable.

Meanwhile, a direct subsidy scheme has the idea that the company produces a service at X location. They note down costs (which Telstra and many other telcos have shown in the past is easy to fudge) and then apply for the difference between what it cost to provide the service and what they are required by regulation to charge for it. There is room for HUGE inefficiencies in values there, depending on the relative honesty of both the contractors who are providing the infrastructure and NBNCo. themselves (once privatised, as they have little incentive before that to game the system).

The ‘efficiencies’ you are talking about in direct subsidies, amount to nothing more than how easily the actual costs are calculated- pure economics efficiencies, as someone of Ergas’ ilk would no doubt find much satisfaction in. He finds satisfaction in elegant accounting and economics. It makes little to no difference to the amount of money actually spent, which is why the cross-subsidy is more efficient purely in monetary terms, which would not be as appealing to Ergas as it isn’t as neat and immediately calculable- you actually have to use some fairly hefty calculation and economics skill to work out the numbers for reporting.

The cross-subsidy scheme is more efficient monetarily, spending wise. The direct subsidy is more efficient for the Budget report, but isn’t for the Budget bottom line.

I can understand where you are comming from but I dont think you are comparing the two idea equally. You are comparing a cross subsidy where real prices are fixed to a direct subsidy scheme where the direct subsidy can be altered each year.

To make it a fair comparison you need to fix the direct subsidy in real terms (and why you would not do this in the real world I do not know.) In addition I thought that the majority of the cost difference for rural and urban areas came from the initial outlay of constructing the infrastructure rather than maintaining it. (Not to mention fibre has lower maintenance costs). So why would the subsidy need to vary at all?

The initial subsidy is subject to as much room for rorting as the cross subsidy since it is a monopoly. This is why the ACCC is keeping such a tight watch over the project. Once it has been established and fixed in real terms I do not see how it would increase.

There is a reason I didn’t fix the direct subsidy in real terms- because labour rates change in real terms every year, therefore it must go up, in real-terms, every year. A cross-subsidy, by its’ nature, balances such changes in both the cost in real terms and the price in real terms, because of the fixed regulations which still allow movement with CPI- a real measure for labour prices as well. The company ITSELF balances the cost VS the price against the CPI and no one loses out.

If you fixed a direct subsidy at a real-cost and your labour rates change, your subsidy no longer covers all differences between cost and price- as you say, not a fair comparison. If you fix a direct subsidy, with changes in regard to the CPI, as cross-subsidy does, it is dependent on REVENUES to the government which are NOT necessarily measured by CPI, as to whether that direct subsidy increase is efficient. If government revenues go DOWN while CPI goes UP, certainly not unheard of, then the efficiency of the direct subsidy in monetary terms, is VERY poor. While a cross-subsidy is totally off-budget and can balance itself.

Will cross-subsidy ALWAYS be the most efficient- I doubt it. But it would be a majority of the time. To get the same with a direct subsidy, you would have to monitor it year by year and change it accordingly- neither efficient monetarily NOR economically. Nor politically, likely- think changes of government and the ability of a certain party to cut the subsidy to a lower level, thereby raising prices in the bush, to save money on budget, compared to a cross-subsidy, who’s only real problem would be if ALL profit from the GBE were removed for budgetary measures….an unlikely case, unless our economy plunges off a cliff. And in which case, the NBN would likely be sold for lump sum payout and a cross-subsidy at that point would be, undoubtedly, the BEST possible outcome going forward for those in the bush- it doesn’t rely on a government who may be scratching for money, to subsidise so they can afford reasonable broadband.

On your second point, of the subsidy being highest in capital expenditure- yes, it would be. BUT, it doesn’t STOP there. The NBN has a 99.99% uptime goal. To have that, SLAs are produced which require a certain callout response time, etc. Naturally, to maintain these in regional areas, it would cost more- that is the nature of the labour and logistics in regional areas. Therefore any subsidy must continue after initial construction to allow for redundancy, maintenance and outages to be dealt with in a timely and reasonable manner….or you get what we’ve gotten in 15 years with Telstra- consistently decreasing maintenance on the network where it isn’t profitable to do so. It is less prevalent with fibre, but still maintenance is always paramount.

Ahh, I see, we are approaching the derivation of the direct subsidy from different angles. I would have thought that it would be derived based upon the business plan. From that an average differential in costs could be derived over the entire project and used to negotiate an appropriate subsidy to ensure that prices are kept to a minimum and the IRR meets an acceptable level.

From this position the subsidy would not need to vary (in real terms) as costs have been forecast over the lifespan of the project and all that is required is to meet the forecasts. Labour cost fluctuations and other unanticipated expenses would be handled in the same manner as a cross subsidy model with one exception, where the cost blowout was restricted to rural areas only. This model would drive them to reduce costs in rural areas but so does a cross subsidy model once the initial price has been set.

The other aspect that I do like about the direct subsidy is lower prices. Given the large benefits from the NBN that are constantly promoted, increasing the uptake by lowering prices will increase the net benefit to society. Which means that even if a cross subsidy is advantageous in isolation, the positive externalities from the project can make a direct subsidy more desirable.

Btw just so we are looking at the issue along similar lines, I would have thought that the current regulatory environment is the basis for the models. This includes no price discrimination so if the subsidy from the government was cut for some reason it would automatically go back to a cross subsidy model and prices would rise (profits fall).

This idea that FTTH isn’t for everyone because not everyone will use FTTH speeds is flawed in the extreme; it implies that there are no other advantages that fibre has over copper. The cost to maintain, reliability and latency are 3 things that are ‘for everyone’ straight off the bat.

Thank you Quink.
What more can I say. Thank you for intelligent discussion. I bow to you for the enlightenment you bring and sharing with us all your work you have taken the time to do.
Now to do in-depth reading. :{P
Renai, have you got Brownie points to give. Quink deserves them.
Most excellent posts. I feel shamed in comparison to the quality of his posts for good reason.
Can’t say more than that, till I do the digestion of the information. This will be good! :{P~

What I don’t understand is that he hasn’t given any vast amounts of details as to his alternative policy that is not only going to wreck the current NBN and those users are using it – but also ads to the massive delays in starting his own policy?

There was merit in his FTTN policy back in say 2006-2007 when the last of Telstra T3 shares being sold & and there was still merit in the FTTN technology at NBN MK1 back in 2009-2010.

I’m constantly amazed that for someone that claims to be ‘technologically agnostic’, he whines a lot about people wanting the opponents product. If he was so agnostic on the topic, it shouldnt matter.

Its hypocritical to say ‘I’m agnostic’, then say the cheaper option must be the better option. The debate should be about the technology more than the price. And if its focussed on the tech, FttN runs a distant second.

2 very simple questions.

Whats the expected build time for a FttN network?

Whats the life expectancy of said network?

If you want to base it on dollars, then toss in:

How much of the investment in the network will be recouped?

They arent hard questions, but they never seem to get an answer.

And for someone thats supposed to be technologically agnostic, that speaks volumes.

Turnbull is walking a very slippery slope here. Does he reeaaally want the media asking harder questions? Really?
He has gained the traction he has from the mainstream media on the whole being biased against the Labour Party, and importantly for him, not willing to ask hard questions. He has been able to perpetrate all sorts of FUD and mistruths, and have it go unquestioned. Its made some good headlines though, and got people attention. People believe what he is saying is the truth, because he isnt challenged on it.He has been able to fool the public into thinking he has a workable policy, because he hasnt been questioned on it. He fools the public into thinking he can rollout faster, cheaper, etc etc because he hasnt been asked for details on how he is going to actually acheive any of this. His policy has zero credibility until he can outline those basics, and the media arent pressing him on it.
Does he really want the media asking what is happening overseas when a bit over 80% of investment (including Turnbulls own money) is in FTTH.
From what I can see, the absolute last thing he should be wanting the media to do is ask questions, and hold him accountable. It wont end well for him.

Find me a North Shore blue ribbon Liberal-voting house. Now tell them that an unskilled worker in Armidale has 100/40mbps with 2 terabytes of download, but they will NEVER get that… They will get FTTN 25mbps. Then wait.

I have had discussions with tech-illiterate people, but they get numbers -> higher speed = better. Liberal voters tend to be interested in ‘better’ and when a Lib teenager finds that they can’t get NBN, they may start putting pressure on.

I want NBN and I vote. Our Richard torbay here in Armidale is about to get a nasty shock – all his business supporters want NBN. Fibre NBN. NOW!

Imagine how many campaign contributions he is going to get when he says no. (He has to say no – he is now a member of the Nationals, its part of their policy platform that they get from the Libs.)

Yes, how dare the “technology media” think the best broadband plan for Australia is the best broadband plan for Australia. Me thinks Turnbull is feeling a tad inadequate about his patchwork plan now. One that we STILL dont have full details on. Maybe if he stopped being a coward and answer the tough questions about it he could find someone to “cheerlead” his gimped version of the NBN too.

Imagine Turnbull was a leader. Imagine he was forging Australia’s future with a well thought out, costed, policy. A bit a positive chest thumping for kicks while he says:

“The truth is there is no country in the world that is spending the sort of money – anything remotely approaching the sort of money our Government is spending on broadband. ”

Sadly he’s not doing any of those things. Negativity and attacking the media for being pro NBN.

Which is so ironic. IMHO he needs to clean up his own house. Lead in *his* portfolio, take his party members to task for sprouting nonsense about *his* portfolio and the media that sit there like dummies while his members embarrass themselves with flat out incorrect statements, half truths and misdirections.

By all means find a better NBN policy but do it through logic and reasoning, stop your party members using misinformation to swing the public.

Turnbull gave the high ground speech about qualities in politics. Walk the path, don’t just talk about it. We are not fooled by your shift of focus Turnbull and we remember. You’re doing better than so many politicians, but we still want more!

I think Malcolms comments can basically be summed up with “Hey Ma, look! Everyone else but me is marching out of step”.

Heck, just yesterday ZDNet had an article comparing our roll-out to those in Singapore and NZ, and it’s not the first time I’ve read articles about how we compare to other countries, so I’m not sure where he’s even getting that idea from.

From what I read, we are actually doing pretty well compared to how they are doing, with both countries, especially with take-up rates.

I think the problem is the debate is treating the NBN as an end in itself whereas it is really a means to an end. I think this is the point Paul Budde is trying to get across. I think it would be better if we focused on how we plan to use the NBN and let that drive the debate (and the roll out). Get the right technology in the right places at the right time to meet the real ends. Let the overall government project be benefit driven.

Turnbull’s thought bubbles amount to deception. A smokescreen devised to make Liberal leaning voters think its safe to vote Liberal.

FTTN will not be implemented. It will take the Liberals until 2016 to begin to implement it.

FTTN will be more expensive.

FTTH is inevitable.

If you vote for Liberal you’re voting for the Liberals to sell NBNco to Telstra at the earliest opportunity (probably 2017) and then all you’ve really achieved is higher end user prices and less ubiquity. Why you would want this I don’t know since there is nothing else to recommend one to vote for them. Their entire edifice is built on the same intellectual dishonesty that has you thinking they will build FTTN and it will be “ok”. Time for the red pill, CMOT.

Politicians hate it when the media report facts and make rational analysis. They seem to think the job of the media is to take political press releases verbatim and print them.

Unfortunately much of the media these days doesn’t bother with rationality and faithfully allow all sides simply to present their opinion without further analysis. We have seen some very strange reporting in areas like climate change where a considerable weight of evidence is in favour of one side yet the media has been very careful to preserve balance and present both sides without any hint of criticism. The ABC can be a shocker for this.

Well done tech media for digging into claims and presenting a rational analysis for your readers.

“However, the notion that wireless could serve as a replacement for fibre or other fixed network technologies is heavily disputed by the global technology community and is a view outside current mainstream thinking on the issue.”

It is certainly well outside modern physics, and I have no doubt Turnbull has been privately and firmly told that by technical experts.

Malcolm, release your damn policy so we have something to compare it to then! While you are at it, explain to us why other countries are worthy of fibre, including ones you have invested in, but not poor old cultural-cringing Australia.

How he can be in the same party as Abbott, Hockey, Pyne, Truss and the rest of their technology illiterates and then accuse the other side of being uninformed is just beyond me.

Well it is easy to work out why the Coalition is really out of touch with reality and call the others that don’t agree with them uniformed. And they are correct, they are uniformed. Just uniformed with the rearrangement of the universe (alternate reality) to meet with the financial best interests of their funding Supporters. They have been informed by their Supporters and they believe their Supporters could just not be wrong and lie to them, and as such it self-perpetuates a really funny downhill spiral. Call it the “Death Spiral” as it always hits at terminal velocity unless you realize early enough to pull out of it. Which currently, there is no indication of them pulling out of that spiral to death yet.
I wonder how much of this mud will stick on the Coalition for a long time from the NBN’s roll out. So far the whole Telecommunication solutions that have come out of the Coalition have gone from disaster to worse. See what happens when you allow Industry to write the Laws of a Nation in exchange for contribution funds. Don’t forget that this is from a social point of view as the financial doesn’t even support itself without the social aspect to feed it. Money only has worth to us and to nothing else in the Universe, remember.
If the Finance does not pay heed to the well-being of the Social aspect that feeds it and keeps it alive, then it is viral and will kill it. You never kill your host. The alternative is to nurture and strengthen your host which in turns strengthens you. What currently is happening?
Oh! There is your answer. It’s viral. Good Luck!

Why do you people post here? Seriously, I know Renai gets annoyed at us sometimes for being too pro-NBN without regard for objectivity, but do you REALLY expect anyone here to listen to a statement like you’ve made?? If you truly believe we are completely subjective, why would you even hope you’d be listened to??

Umm. An order of magnitude behind schedule would mean it will be builing for the next 100 years. (a 50 year build time frame is still within an order of magnitude of their 10 year build btw – thats what order of magnitude means – If I am wrong, someone please correct me..)

Please provide a source for your 100 year build time frame.

@Everyone else: Please don’t need to scare him off guys, we need to know where he gets his figures so that we can understand his position.

When we get to the later part of next year and it becomes clear that NBNco is delivering on its promise, do you promise to come here and say you were wrong? And tell your mates you were wrong? And tell your mates why listening to Alan Jones is damaging to your status as a thinking human being?

Conroy- The NBN is slightly behind schedule, but is on track to deliver the NBN to completion within 6 months of when originally planned

Turnbull- We’ll deliver ours sooner

Conroy- How?

Turnbull- By using FTTN

Conroy- Where?

Turnbull- We’ll work that out when we get into power.

Conroy- Capex has increased by $1.4 Billion but will be offset by higher revenues in later years, leaving ROI at slightly higher than 7%

Turnbull- Ours will be cheaper

Conroy- How?

Turnbull- By using FTTN

Conroy- Where?

Turnbull- We’ll work that out when we get into power

Conroy- The mainstream media are anti-NBN. Their rhetoric is not factual and they are not interested in debate, just selling subscriptions. Here (insert Fin review, Australian, Daily Telegraph article here) they have outright lied.

Turnbull- The Tech media is religiously Pro-NBN.

There’s no question Turnbull is a very good SHADOW minister…..

Anyone else see John Clarke and Bryan Dawes in a conversation like that?

I can’t take Turnbull seriously anymore on this. His desperation on pushing the Coalition plan when less are listening now, than they were before, is Yes Minister worthy- and I don’t want Yes Minister in my government.

—
Mr. Turnbull. You’ve said you would get NBNco to redesign. Are you aware that the processes involved will cause 2 to 3 years delay? Doesn’t that make a mockery of your “faster” claims?
—

Renai, I’m hoping you will write an article going into the hypothetical situation where the Liberals win power and then attempt to use NBNco to redesign. Just the facts. Tell us about the actual process. What it would take to re-appoint the NBNco board. How long it would take NBNco to deliver a new business plan and a new network design. What implications that has for regulatory oversight. What implications it would have in terms of Treasury’s treatment of a now damaged investment. Which parties would have to be re-negotiated with. How the industry and the consumers might respond.

For exactly the same reasons it took years to get the NBN off the ground, its going to take years to turn it around and deliver an “alternative” network. Its time that Turnbull is exposed for making promises he simply cannot keep. He cannot deliver “faster”.

Renai – why not suggest to Turnbull an interview with 2 or 3 people from the technology media (not ‘commentators’).
Either chosen at random or a balance of pro and anti NBN opinion holders who know what they are talking about, and letting him go for it. Have him put forward his policy/points of view and then asked questions on the subject.
Would be very easy to hook up a web cast.

Turnbull was an investor in, and sat on the board of OzEmail when it started. This is where he claims his IT and internet credentials.

Frankly, throwing some money at a business plan that related to a (then) startup internet provider, providing dialup access in the mid-1990’s, and bailing out with millions of dollars when the term of the investment came up, does not make you an IT or internet expert.

It makes you an astute investor who recognised a good business plan. It could have been a business plan to manufacture left-handed screw drivers or striped paint – if the numbers look good, you make an investment.

Oh Fox News is hilarious. It is almost like watching the old DDR1 “Der schwarzer Kanal”. It was so over the top promoting the Communist ideal it went into the fantasy realm. Fox News is it’s opposite and does exactly the same. All Murdoch did was copy the Communists tactic to do the same for Capitalism. Who ever doesn’t see it deserves to be hoodwinked by it. LOL

Folks…not sure that this column focusing on Turnbull’s parochial “NBN cheerleader” tech media remarks disproves his point. It may be fun to write about, but pretty sure it’s not useful to entrepreneurs, investors and service providers all struggling to build a more viable digital economy ecosystem in Australia. Turnbull’s speech highlighted a number of issues related to our struggling technology and start-up ecosystem: the changed global competitive landscape; tax (specifically the complex treatment of stock options); our relative lack of success stories; and the implications of building vibrant digital hubs densely populated with diverse and highly skilled technology and business talent. Shame your post did not detail or expand on those issues because we need much more of those discussions in our media and our industry forums. NBN of course is a key part of that…but it is only a part.

As a former business tech journalist (BRW waay back) and the moderator of the Q & A session with Turnbull at Innovation Bay yesterday, have to say there is room for some improvement in Aus tech coverage. I think we get too sidetracked by largely repetitive discourse about NBN issues at the expense of a deeper exploration into a range of inter-related issues affecting our competitiveness as a nation and our role in a globalised tech-driven economy

Renai…you have every right to defend your profession…but I just don’t think it is “the” story we need right now.

Well said Sandy. Fast broadband and the way that it is paid for and delivered is a really important topic, but on its own it’s not what is going to foster a better entrepreneurial climate in this country.

As the organiser of the Innovation Bay event yesterday, I thought Malcolm Turnbull did an excellent job of addressing the issues around how government could/should help the technology entrepreneurial sector. He was eager to listen and indeed challenge the audience on their points of view.

However I also think that Malcolm did himself a big favour too. If you want to generate coverage and publicity for what you are saying (and over 50 comments on a Delimiter post) there is no better way than to criticise the Technology Media! It’s like a red rag to a bull…

PS Innovation Bay does have members who come from the technology media. Indeed we had two on yesterday’s guest list that just did not turn up.

There’s a false dichotomy here. It’s possible to talk about two things at the same time. It may very well be possible that Renai will make a second post about this event. However, one of those things, the NBN, is something that affects all Australians and it affects all of us. It also reflects on whether this country is going to be technocratic or one of passive media consumers – that’s what 400 Mbps vs. 4 Mbps typical maximum upload speed implies. Innovation in technology is about two things – communication and at open mind. It’s this excellent playlist: http://www.youtube.com/watch?v=AqwJXTyfNqU&feature=BFa&list=PLgE-9Sxs2IBVEoz0MkIzcUmFkXWpmw2zo

The number one thing we can do to support technological innovation is a massive explosion in bandwidth. I know because I like to think I’m innovating, technologically, and it’d make my job a bit easier. Upload and download. I watch this video and I think that Wi-Fi over FTT-anything and a netbook are the best gifts we can give to our kids. When I look at Hacker News and what’s on it, it’s not exclusively Silicon Valley and venture capitalists – even though it’s hosted by one. Graphic design and hosting are opening up more with every day and Github is an incredible repository. Money is an increasingly ancilliary concern and hopefully, in the medium term, will only be a barrier for things like big launches, software defined radios, building databases and 3D printing.

The last era of technological innovation was a workbench and a soldering iron in a garage. The next one, that’s been in progress for a while now, is of Craiglist and 4chan, bandwidth in the home. Here in Australia we have Firemint and Halfbrick. Google Maps started here. CSIRO has many Wi-Fi patents. Atlassian makes some amazing things.

Despite these, is it true that Australia is under-represented in success stories or attracting businesses? Yes. Absolutely. What’s the way to go about fixing this? The one that’s been shown everywhere from Estonia (Kazaa, Skype) to Slovakia (ESET) to China (Alibaba)? A computer and a phone line. Once you have that and you have something under your belt it doesn’t matter if you’re in Australia or not – you’ll find investment, even if it means your moving overseas.

It’s not unreasonable for Australian investors to be cautious and conservative. In many cases, they still live in the world of Fairfax and News Ltd. media and see the world through this bubble only. The biggest problem is that Australia doesn’t have much of a legacy of rich people who understand technology – but maybe this will change with people like Steve Wozniak coming to our shores.

One reason he did? The NBN. (or at least, while a minor reason, that was the ultimately not entirely true fiction the newspapers ran with :P) If nothing else, then maybe as plan b), the NBN will just maybe leave us with a generation of people of education through the Internet and a love of tinkering who love technology who are happy to be venture capitalists. But the biggest problem right now is that we, right now, have an education system that’s able to churn out game developers and software writers and scientists, but in great part an economy that has no real use for them.

We live in a country where, among businesses, the height of technological innovation and investment therein is really MYOB.

Lookat how google / facebook started by people working from their own home 5 years ago when they could barely dream about internet speeds we take for granted today. Corporate culture, attitude, legislation and local support all make as much of an impact if not more than infrastructure.

The one thing I have said is that when you increase available upload speeds hundred-fold, you’ll get a shift in ideology (and with NBN users using about three times more gigabytes on average already that’s only inevitable). Whether that bandwidth is FTTN or FTTH doesn’t matter all that much as to whether it’s there already, and every bit per second matters. For example:

Facebook was started in a dorm room at Harvard and Google was a research project at Stanford. Hardly someone’s home. What did Facebook have when it started? A simple minor bunch of PHP scripts, lots of JPEGs and lots of names. Not sure if any of corporate culture, attitude, legislation or local support really had much to do with Facebook’s early success.

Don’t get me wrong quink, a good idea is essential to any start-up firm. But to go to the next step and develop the idea further you do need capital. Whether that capital is from angel investors or venture capitalists is irrespective, but it does need to come from somewhere along with some business expertise to assist the entrepreneur in taking his business to the next level.

Yes. But at that point in time it doesn’t usually matter any longer where you are. Jack Ma got his $25 million not in China, but the US. More and more, these days in part doesn’t even matter what you have created or what your formal education is as long as you have proven the right skills in creating the next Instagram or whatnot. There’s a shift as more and more companies, like Apple, Facebook or Google, are engaging in acquisitions for hires, or acquihires, in getting educated people who are experts in a domain, rather than in acquiring or even venture capitalising companies.

For people who are looking towards ultimately being acquihired or towards getting VC funding overseas (because let’s face it, there’s a limited VC or even innovation scene in Australia), it makes it much easier to build a great thing when you’ve got a massive pipe into your dorm room/bedroom/garage/study. If you’re in the running for technological innovation, then Australia should do everything it can do to at least provide the facilities to keep ahead of Andrei and Alexandru in Romania or Joonas and Kunnar in Estonia or Jeff and Steve in Kansas City, MO. But right now, the lack of a coalition plan and the timidity of the Turnbull plan are counterproductive when it comes to getting that 400 MBps upload opportunity for everyone up.

What the coalition needs to do is ask themselves: “What can we do to help people coming out of the many excellent unis we frankly have, coming out of the many high schools we have to help them be innovators at an internationally recognised innovators?” And if I look at just India or China, it’s not a one-column approach, but the definitive answer for one of the columns meant to be supporting this seems to be as simple as ‘bandwidth’.

Yes quink, you can have your idea here in australia but we want them to develop their business HERE.
We do not want them to move to silicon valley or whatever other haven for start – up firms exists overseas. We do want to encourage greater links to the US but we do not want to replace all of our own business with that of the US but to make it much more convienient to do business here. We want to grow our own industry and make people willing to start businesses here in Australia rather than feel that they need to move to America or elsewhere.

Why is there not more discussion about the growing innovation industry instead of focusing on this one project as Sandy pointed out?

The internet does allow greater connectivity but certain things still have to be done face to face and meetings with investors, creditors, new business parters etc usually are still face to face. There is a limit to replacing human contact.

My point is that it is essentially two debates. The NBN is one debate. The issue of innovation and start up firms in the IT industry is another debate. The industry has been a large one in the US before FTTP and there are many other factors affecting that can be addressed while the NBN is being built.

Thats a good point which I do not see raised or analysed enough.
Why is there not as much venture capital in Australia?
Why is the environment for start-up firms so poor in Australis compared to the US?

The NBN will help but faster internet will be the be all end all that the government has made it out the be. There have to be many more underlying cultural issues that should be brought to light which can be worked inside the 10 year timeframe.

Good call Sandy, I see this issue (innovation, investment, start-ups, etc) as going hand-in-hand with an NBN (it’s one of the reasons I’m such an NBN “fan”), rather than being a separate side issue.

Without the government supporting small business/start-ups, “fast internet” will only be half a good idea. Were an innovative bunch with a lot of great ideas, and I’m fed up with hearing how Australians either have to sell those ideas overseas, or head elsewhere to make it work, we need to start supporting them here and keep the benefits here.

Tinman
Agreed, the government of whichever shade must do more and actually incentivise (taking care, there will always be rogue’s taking advantage of any opportunity to make a quick buck )
However it is a team effort, the private sector has to do their bit, even if they have to take on a learning curve and seek out mentors for their role

Exactly, Australia is living proof that government working WITH private enterprise, works. With well thought out framework, I have no doubt Australia could foster a healthy environment for start-ups and small business that actually want to give it a go.

Sandy, it is not a simple issue.
Unfortunately a Colonial attitude has been engendered in Australia.
I remember when the CSIRO and Aust uni’s sought funding from the Conservative Government back in the 60’s for research and a prototyping/manufacturing facility in semiconductor and integrated circuits to be based in WA with the WA uni as lead. Knocked back as they believed our future was agriculture and mining – “Colonial Economy” – technology, just import or locally manufacture overseas products.
The US however invested much in scientific R & D which benefited their economy and made them the technology leaders which led to their healthy innovation culture, our Colonial Government and Business sector preferred to hang off someone else’s coat tails

Even before that, post WW2 the CSIRO and Aust uni’s were among the World leaders in Computer Sciences and built one of the first supercomputers (CSIRAC). Unfortunately the Government CBA determined there was no future in computer technology and cut funding to that line of research, in fact limiting funding technology research generally. It took the Whitlam/Hawke/Keating governments to change that. That is why we have so few technology patents, note the years of the CSIRO’s key technology patents.

Prior to Whitlam, seed funding was a non issue in Aust. In fact that was one of the reasons they were hated by certain sectors because they funded start ups, not many successfull, but not bad for amateurs and the program would have been a winner, Howard destroyed it and bankrupted the startups with the greatest glee.
The areas of research the conservatives funded are medical ( self interest ) and agricultural

The media and the Conservative Parties , the true blues and the private schools have created the National mindset over the decades and it is incumbent on them to change that mindset for our Nation to thrive, it won’t just happen especially with the Alan Jones’s, Bolt’s and their ilk shaping public attitudes

Fancy the “people who actually know”, supporting the “best system”… eh? I.e. not your’s, must hurt.

A system which repays itself, will be a valuable saleable asset, is designed to make a fair ROI so that the access fees and therefore cost to the public minimal, is ubiquitous, as future proof as any technology can be (unlike already obsolete FttN) and takes the reins from a previously uncooperative incumbent… all in one fell swoop. Shall I continue?

Malcolm, if that makes me a cheerleader, so be it.

Because, I have all of the “available evidence” that the NBN will be a winner on my side… what do you have apart from a heap of ministers disagreeing with each other, lying, uttering FUD and a leader who says, we don’t need this internety thingy anyway :/

So I’d prefer being a cheerleader to such vision, than a mindless follower of a posse mentality, political party (run by the above buffoons) who will unashamedly undo all of the good work mentioned, simply out of sheer political, ideological bastardry.

How long have you got Michael? Many, many reasons like:
a) A business culture still steeped in farming, resources (mining) and rea estate
b) A general and long-held suspicion or venture risk-taking in tech (while much risk OK for mining ventures)
c) lack of Australian tech successes in global markets
d) punitive tax system related specifically to the provision of stock options for start-up employees
e) A robust employment base in more traditional sectors (mining, financial services, multi-national company subsidiaries) at high salaries (risk growth companies can’t compete)
f) An old economy media which “doesn’t “get” the new stuff.
There’s much more…but will stop now.

I always though a large one was our attitude towards banruptcy (compared to the US) or when you do a complete change of direction for your business. The flexibility to start over is lacking here is Australia from what I have heard.

Its not so much the attitude to Bankruptcy per se. It’s the way we (Aus) view failure as a shame…rather than a sometimes by product of risk and entrepreneurialism. I have just returned to Aus after 15 years in the US and this attitude towards failure (in tech) is shortsighted and punitive. At Innovation Bay yesterday, Turnbull made the very valid point that it is not so much they Australians aren;t a nation of risk-takers and gamblers – clearly we are when it comes to horse-racing, sport and mining exploration. The conservative attitude against risk is levelled more harshly toward “new economy” risk taking. We have not yet demonstrated enough success stories to give investors confidence that tech is an asset class worth the risk. So we have a lot of work to do.

I do not know about SA, but the fed govt found that prices rose 30% more in states electricity assests had not been privitised. As a consequence there has been considerable pressure on NSW and QLD to privitise their electricity assests in recent months from the ALP.

Sorry Dave, I just re-read your post. We are commenting on two different but related topics. You are talking about SA having the highest prices while I am talking about how the prices have increased over time.

The actual price of electricity is dependant on how it is generated and what natural resources are available so it can be quite variable. I do not know many specifics so I do not want to comment on them any further than to say that once an initial price is set why should it increase significant above inflation? That is why comparing price increases is more common than comparing absolute prices as many states will have different circumstances.

E.g. I know victoria has massive coal reserves in the Latrobe valley which makes coal power plants a very cheap option.

Yes but if the absolute price in SA is higher than the absolute price in Queensland is it not reasonable to believe the percentage increases in SA have been higher? This of course depends on what the prices were relative to each other in the first place. From Gizmodo : these are world ranking for price of power: “South Australia (third highest), New South Wales (fourth highest), Victoria (fifth highest),and Western Australia (sixth highest). Tasmania is the eleventh highest and only Queensland (sixteenth), the Australian Capital Territory (twenty-first) and the Northern Territory (twenty-ninth) lie outside of the top eleven.” Anyway the bottom line here is private versus govt an it’s a mixed bag but privatisation is no panacea.

You are correct in that it does come down to the starting point. That is what I was getting at in my previous post. NSW / VIC have very cheap sources of power in the hunter / latrobe valley from coal (I don’t know in SA) so their energy costs are relatively lower.

This affects the initial cost of power generation. Once the network is established the costs become as growth in prices should be comparable between states since they face similar pressures, e.g. population, maintenance, capacitity but the base cost will not be comparable due to different methods for generating electiricity and natural resources.

I agree all sorts of factors are contributing the the actual price currently. Renewable targets, feed in tarriffs, REC, “gold plating”, government dividends, smart meters, the list goes on, all have an effect on your final power bill. However, generally they will add a component on to the price rise each year for the addtional cost. That is why they look at the change in prices for each state instead of the absolute price.

Michael, where do the differing legacy issues of the state electrical boards of old come into your equation? Differing levels of capital investments , differing maintenance philosophies and accounting and cost pricing practices are all historical issues which would heavily impact current power providers.

I would have thought rate of increase in price to be an over simplified and misleading indicator, at least over the short term.

If you compare the rate at which prices have increased over a fixed period you can compare different models of operation irrespective of base starting prices. The more efficient model will have smaller price increases over (e.g. 20% over 5 years vs 33% over 5 years).

The reason why I mentioned that Dave’s example that SA has the highest power prices is still possible with NSW / QLD having larger increases.

E.g.

NSW
100 –> 160 (60% increase)

SA
125 –> 175 (40% increase)

NSW increases more than SA but still has lower prices. (hypothetical, I do not know actual prices off top of my head).

If this was any other government – and I do say any (such as the USA) – it would have done government buildings first THEN gone to rural, metro, regional or what have you. If the government doesnt use it, how can you sell it ?

In their shoes if my primary concern was the Nations best interest I would have done the same. The Media is rabidly anti Labor, the odds were and are the Coalition would get back in and that would leave Rural Aust in the relative Dark Ages for ever, thus destroying the capacity for decentralisation etc.
The Libs would make sure the commercial and industrial areas and the Government areas and the Blue Ribbon set were looked after, the rest could have crumbs, better than nothing but not much

Why do you insist to use the wording “Coalition’s rival policy” when they are yet to detail any such policy? Since when did continual FUD and complaints become policy?

I am yet to read any real detail released by MT or the LNP about their “rival” policy, and until an actual policy is released, you do a great injustice to your readership by continually stating that the have a “rival policy”.

Its a bit like media presenting a story about evolution and then saying “here’s the other side” and rolling out a creationist. “Oh yes, we’re being fair and balanced”. No you’re not, you’re presenting some unsupported fiction that people invented before they could write as being somehow equivalent to a tried and tested and constantly developed scientific theory. That’s not being equal, it’s comparing apples and porcupines.

when all of the coalition party members are aligned with their statements about the NBN, then it will be a policy.
until that time it is simply one man standing alone with a vision (The Turnbull), while being contradicted by his party leader and other senior members.

On reading (ok, skimming over) that, it kinda reads like OPEL Mk II. It’s like “Back to the Future” (or a zombie) the way it keeps coming back.

The only concrete funding in that that I could see is for wireless/satellite (4-5 billionish), and while there is mention of fiber, it seems to be heavily leaning towards a fiber backbone, not fiber around/to homes.

People are complaining here that the NBN’s going to be a monopoly. Have they encountered Telstra? The main difference is that the government will have control over the NBN.

Or would you prefer Telstra and Optus compete in rolling out FTTH in a dozen suburbs in Sydney and Melbourne while ignoring the rest of Australia (or rather, saying that satellite is good enough for the rest)?

Sorry Malcolm, you’re complaining that knowledgeable journalists don’t trust you, and expecting them to accept vague promises about some sort of future “plan”?

“Is there anyone from the technology media here, by the way, anyone?” *Renai puts his hand up*
*hears a whoop whoop whoop running out of the room sound by Turnbull*
Damn if only someone was there to answer that question.

Hi all. your all part of the Cheer Squad! Woopie Do! Well there is a bit of that

For info have watched contractors drilling under roads and into two Telstra exchanges in the last 2 weeks. These are mostly definitely NBN work at Crace (Mitchell-Gungahlin) and Melba, Belconnen. Guess they are preparing for fibre rollout in these areas although Melba area is not on the schedule. Crace is having fibre run to several suburbs and have seen some laying of cable into the ground between Mitchell and where the suburbs are. It is the main exchange for the whole of Gungahlin area. Melba serves NW area of Belconnen. Both have lots of trunk routes to other places and even interstate which NBN can lease. This is all in Canberra (city of lots of hot air and eternal bullsheet!)

Could well be efficient forward planning, run the cables for the other areas to be fed off that exchange even if not in the current plan, saves double work in the exchange and they can be run to the first node point. Save a lot of time when those suburbs are being rolled out.
Could well be very efficient smart planning and actions maximising the efforts of the specialist teams, no need for the exchange team to revisit if they also installed and equipped the FAN, they can focus elsewhere

Hmm, it’d be interesting to watch a debate on QandA, on the NBN going into the next election. I can see it now. “Australia’s Telecommunications: Modern or Vintage? You ask the questions and get the answers.”
If the the Libs got someone to go on that one, I’d need to do a reality check.

“The commentary about the NBN and the issues associated with it is just so unbelievably uninformed.”

Turnbull appears to be very confused.

He seems to be interpreting a lack of comparisons to (irrelevant) overseas rollouts as a lack of knowledge of them, while disregarding the actual issues at hand here, such as this simple one: which policy is better?

That is what voters should be asking, and that is what the media should be informing them about. Right now, there is literally no comparison.

I’m pretty unhappy with how everyone thinks this ‘free’ NBN is a good thing for them. While we all want faster speeds for illegally downloaded tv shows, there is no such thing as’free’. The government pays for things by taxing companies and workers.

YOU ARE A worker.

You give in the order of 1 dollar out of 3, or 4, to the government – which in turn spends it all on things like the NBN. Strangely enough my ADSL 1/2 connection that I pay for goes UP under the NBN. So it aint a free lunch people. Even if you’re a student or low income earner now, you’ll pay a premium for it when you get a good job – when you could be spending it on whatever the heck you wanted! Fast internet, shots at the pub, a day off work in the sun… exercise your right to choose.

1- The NBN is not free. It is loaned by the government to be built and paid for by the users, who would be paying for internet anyway. It is an investment. No investment is considered free. Just waiting on a return.

2- Do you have ADSL for less than $35? If you do, I’d like to know who you have it through, because I’d be calling them. The cheapest plan on the NBN is $35.

Paulo.
Love your use of the term “worker” and wild pathetic assumptions about said “workers” life choices.
Which private school did you attend??
How much all up for your ADSL2+ including line rental and what upload and download speeds and what quota??

Quite simply, he was pointing out that workers and companis pay tax that the government spends, and that we fall into the worker category. No loading of emotions, unless you choose to take it that way, and nothing derogatory.

Actually I went to public schools, then worked my way up from menial jobs to be somewhat successful.

Now I choose to pay for my ADSL2 connection, it does good enough for what I want to spend. And there are choices in the market if I want to spend more. But many family members and friends that arent IT nerds dont care about massive data quotas or speeds – and they’re forced to chip in hundreds or thousands through tax into this NBN scheme.

The NBN is being paid by taxes. It’s being UNDERWRITTEN by taxes. Unless you think people are going to up and stop using the internet, rather than GROWING its’ usage, the NBN will pay for itself and the taxpayers will have come out of it not paying a cent overall.

You also still didn’t answer my question about how much you pay for you rADSL- is it less than $35 a month, including line rental?

Paulio you seem ‘somewhat sincere’, apart from the tin foil hat comment (which could have been thrown right back at you, but wasn’t ;) so…

The NBN is being funded from borrowed money via bonds etc (as other’s have said) not income tax dollars so your/my 1 in 3 is not being used. It is also projected to repay itself and be a valuable asset which can be sold and the $B’s used for whatever (health, education, etc) – one of your fears allayed.

NBNCo has given an undertaking that prices will be on par or better, for a product which is equal or superior, so you will pay the same for better or less for the same and price rises have been frozen for the first 5 years (iirc) and pegged to CPI thereafter – two of your fears allayed.

Not something the feds shoulda got involved in? The feds are elected to build infrastructure for the populous. But because our comms were privatised, some seem to think the government should now just let people suffer, in the hands of profit seeking companies. NO – these companies have forsaken a large number of Australians, which has required government intervention. And having now intervened the government can’t reward these parasitic companies for years of neglect by saying “you keep the creamy profitable areas” and BTW we will also pay you a handsome subsidy to own and run a network in the bush… These companies weren’t interested, so the feds it has to be – three fears allayed

There will be ubiquitous access to the NBN, so everyone in Australia will receive the benefits, not just some. If you want a basic plan because you aren’t a tech head fine, here it is and it will save you money compared to now. If you are a tech head and want fastest/biggest here it is… but it will cost more than a basic plan (obviously) and those buyers will be helping repay the build quicker. So saying they will be illegally downloading TV shows, when in essence they will be repaying the cost sooner, is somewhat tin foil hat-ish – four fears allayed.

For all the hullabaloo about no network competition (not from you – and remembering that Telstra owns almost all of the current network anyway – sigh) people will, with the NBN have “more choice”. People in urban areas will have the choice of multiple RSP’s as they do now. But many rurally situated even now, still only have Telstra as a retail choice and must pay accordingly. They will in future have choice and will save money.

To recap. NBN will not take your $1 from $3. It will repay itself. It will be cheaper and/or better for everyone including battlers! It will give more retail choice to all Aussies and it is future proof as much as any technology can be…

“You give in the order of 1 dollar out of 3, or 4, to the government – which in turn spends it all on things like the NBN.”

Actually the NBN will be paid for out of borrowings, not directly out of tax and the repayments will be made by the customers of NBNco.

It is the same as building a rental property. You put up the deposit, the bank loans you the rest and the loan is re-payed from rental income. Eventually the loan is re-payed and you are left with a steady income and an asset that can be sold should you choose.

In this case, the government has INVESTED seed capital (deposit), the bulk of the money will come from bonds (loan) and the renters will be the customers using the services.

It is why the cost of the NBN CANNOT appear in the budget, it is an investment.
It is the same as when you do your tax return on your rental property. The total cost of the property doesn’t appear anywhere, only the liabilities, eg interest payments.

One of the things that gets up the collective nose of journalists is the accusation of bias. From what I’ve heard they figure that if they get such accusations from both sides they must be about dead center in being neutral in their writings.

If there’s opinion from pro-NBNers that maybe they are too unquestioning about Liberal broadband statements and rhetoric, then Turnbull’s accusation about pro-NBN bias in the media might be designed to make them say, “Well, if we are accused by both sides of being biased, then we must be about right in objectivity.”

It isn’t an FTTN plan!!. Everyone that thinks the coalition plan is about building FTTN is wrong. Everyone that thinks it involves re-purposing the HFC networks is mis-hearing him. Everyone that thinks that The Turnbull has specified anything about his plan wasn’t listening properly.

The Turnbull plan is this: Halt the building of the NBN, and then let the productivity commision decide how best to build the NBN. That is the coalition policy.

Turnbull has only ever said: I forsee a plan with a mix of technologies like FTTN. He never said: “We will build an FTTN” he never said: “We will repurpose HFC”. He said: “We will get the productivity commission to tell us how best to build an NBN, and I suspect it will use HFC and FTTN”.

That’s it. That is the entirety of coalition policy. Anyone that thinks differently needs to take a closer look at the Member for Wentworths statements. He has not committed to a single action other than “productivity commission”. Even Abbott backs him up on this. (“Pause” the NBN). The entire coalition is behind this “plan”.

Honestly; compared with a definite “FTTN” I am less unhappy with a productivity commission review, but only if I thought it would be impartial. As it is; the productivity commission will be given a brief that all but says: “Give us a new broadband plan, that doesn’t use FTTP.”. They’ll waste 18 months on this before declaring their new policy, which they will start planning for and take it to the next election. 3 years on; they might start negotiating with Telstra. Or; if we are supremely unlucky; they might just award the whole contract to Telstra and they can start building right away! Given that the productivity commission will have wasted so much time they’ll want to get building to avoid losing the election and we will get stuck with a Telstra mk II with a new network and new and fun ways to jack up the price of internet access.

Unless any Productivity Commision report supports the L/NP “plan”, which at present consists of “we think we’ll probably invest in some companies to do some stuff, mostly over Telstra’s copper and HFC” then it’s a wasted effort.

The reality is, the L/NP plan is to primarily fund Telstra to “do something”. Beyond that, we know very little. Which is why it’s all the more amusing that supposedly informed industry pundits buy this.

Turnbull has successfully managed to have analysts “imagine” the policy and how it’s better. Imagination does that. It fills in the blanks when there’s no other data.

People are comparing something that has very little substance favourably over an actual deployment that is delivering to an actual policy.

I can imagine Turnbull doing awesome things with “the internets”. It has absolutely NO bearing on any actual outcome, and folks should really think about that.

It is rarely wasted effort to engage in proper processes for policy formulation. If the ALP could have avoided some of the messes associated with the RSPT, MRRT, East Timor Solution, Cash for Clunkers, Fuel Watch, Grocery Watch, Pink batts, Unlimited Bank Gaurantee it would be in a much better position than it is currently.

“It is rarely wasted effort to engage in proper processes for policy formulation.”

Agreed. Something that the L/NP currently struggle with. In that it doesn’t occur; currently modus-operandi is to decry virtually everything the ‘gubment’ does, rather than actually “engage in proper processes for policy formulation”.

In the last 4 years, how many iterations has the L/NP broadband policy gone through? Zero.

Nothing they have released so far has shown much hope except the idea of comissioning the productivity comission to look into expanding childcare to include nannies. Although that is offset by the fact they are not in power and their decisions / policies do not affect anyone yet.

FTTN isn’t an “end game”. It’s what you deploy, when you cannot initially fund FTTH/ FTTP.

Turnbull’s “quicker, better, faster..” attempts to hijack some lyrics from a Daft Punk song, but in actuality it doesn’t match reality.

It won’t be faster — they have to halt the NBN first, this will result in costs and delays. It’s not cheaper. Long-term, it will carry a cost the L/NP cannot fund.

Inevitably we will be left with a fractured market, Telstra will gain the lion’s share of investment, whom will continue to be disinterested in competition.

FTTN isn’t an alternative choice; it’s stalling the inevitable. Again, it’s what you use, when funding a fibre to premises option isn’t on the table. NBN is (finally) redressing the lack of investment in a market that cannot self-fund to the same degree.

Abbott won’t answer the FTTN > FTTH question, simply because he knows who would actually fund it. Us. Be it either by Tax, or by paying a fee to connect. We would still pay.

With the benefits ranging from $2.4 to $4.8 billion a year (for a 10-20% take-up), and the total “cost” of the system being actually a return of something in the region of 2 billion, I really don’t understand peoples fixation on a straight up cost/benefit to business (which is what CBA’s are actually for).

Renai has. Nick Ross has. Phil Dobbie has. Paul Budde has. I have on my own blog (not that I am pretending to be a tech journalist).

Fact is, all have recognised that while a CBA MAY have given some oversight into the decision making process, it is now a waste of time and money after as 3 year build up and a whole INDUSTRY geared up for the current NBN.

Do you have an issue with their change of mind? People are entitled to change their mind given the right evidence.

What parameters would you have used for a CBA? Would you have limited it to just a straight business case, or would you also include the social implications of extremely fast, pervasive internet? How would you factor future unknown benefits (as in the rise of the internet over copper/modems wasn’t foreseen with the POTS network)?

It seems from my perspective for every person (knowledgeable or otherwise) who says there should have been a CBA, there is one (just as knowledgeable or otherwise) who says it just couldn’t be done accurately.

The one’s asking were by and large Coalition politicians and bean counters and those saying nah… were by and large Labor politicians and tech orientated people.

Who is right?

So as Michael says, it wasn’t done (either rightly or wrongly) and there’s no point now, so let’s move on.

Regardless, the funniest part in all of this for me is… actually those who say, because NBNCo is an unproductive and wasteful government department, we should have had (or still should have) the Productivity Commission do a transparent CBA of the NBN.

The Productivity Commission who are of course an unproductive (pun intended) and wasteful government department – GOLD

We’ve been round and round the CBA issue; it’s been thoroughly discredited in this context on every single occasion, and here we go again. Sigh.

As NBNAlex notes above, it seems to be the Coalition and their supporters who persist in raising a CBA as a distraction and an excuse to freeze NBN while the very slow wheels turn at the Productivity Commission.

Given the pace of technical and operational development in the comms industry, the best guide to the need for the NBN does not come from trying to predict the exact scene in, say, 2040. We don’t know, and can’t know, the precise programs and protocols that will apply then.

But we do know exactly what has happened to the need for capacity over the last twenty years. There has been exponential increase in demand over that time, and it is clear that this development would have been even greater if that level of big-pipe capacity had been available.

It requires little imagination to project this rising demand forward and realise that by the time NBN is completed in ~10 years time, the capacity it enables will be fully utilised. So it is sad that apparently the Coalition collectively are unable to understand any of the implications that are so clearly apparent here.

Get our 'Best of the Week' newsletter on Fridays

Enterprise IT stories

If you have even a skin deep awareness of the structure of Australia’s superannuation industry, you’ll be aware that much of the underlying infrastructure used by many of the nation’s major funds is provided by a centralised group, Superpartners. One of the group’s main projects in recent years has been to dramatically update and modernise its IT platform — its version of a core banking platform overhaul. Unfortunately, the $250 million project has not precisely been going well.

This week it emerged that Peter Grant, the two-time former Queensland Whole of Government CIO (pictured), has joined well-regarded analyst firm Intelligent Business Research Services (IBRS). We’ve long had a high regard for IBRS, and so it’s fantastic to see such an experienced executive join its ranks.

The era of troublesome desk phones tied to physical locations is gradually coming to an end in many workplaces, with mobile phones becoming increasingly popular as organisations’ main method of voice telecommunications. But some groups are more advanced than others when it comes to adoption of the trend. One of those is Westpac.

Remember how twelve months ago, the Federal Government released a new cloud computing security and privacy directive which required departments and agencies to explicitly acquire the approval of the Attorney-General and the relevant portfolio minister before government data containing private information could be stored in offshore facilities? Remember how the policy was strongly criticised by Microsoft, Government CIOs and Delimiter? Well, it looks like the policy is about to be reversed.

In news from The Department of Disturbing Facts, iTNews revealed late last week that Western Australia’s Department of Education has run out of money halfway through the deployment of new fundamental IT infrastructure to the state’s schools.

Communications Minister Malcolm Turnbull has published an extensive article arguing that the Federal Government needed to do a better job of connecting with Australians via digital channels and that public sector IT projects needn’t cost the huge amounts that some have in the past.

New Zealand’s national Government announced a whole of government contract this morning for what it terms ‘Office Productivity as a Service’ services. This includes email and calendaring services, as well as file-sharing, mobility, instant messaging and collaboration services. The contract complements two existing contracts — Desktop as a Service and Enterprise Content Management as a Service.

The Commonwealth Bank of Australia has promoted an internal executive who joined the bank in September after a lengthy career at petroleum giant VP and IT services group Accenture to replace its outgoing chief information officer Michael Harte, who announced in early May that he would leave the bank.

Second-tier Australian bank and financial services group Suncorp today announced that its long-serving top technology executive Jeff Smith would leave to take up a senior role with IBM in the United States, in an announcement which marks the end of an era for the nation’s banking IT sector.

Most companies that live and breathe the online revolution are not tech startups, but smart smaller firms that use online tools to run their core business better: to cut costs, reach customers and suppliers, innovate and get more control. Many others, however, are falling behind, according to a new Grattan Institute discussion paper.